Inflation and the real rate of interest

To test the published statement that ‘the rate of interest that people expect to receive from saving and investment is always positive’, a survey was conducted of 450 New York savings bank depositors, asking them the rate of interest that they were earning on their savings and the rate of inflation that they expected in the next twelve months. The results show that the great majority of respondents seem well informed concerning both inflation rates and the rates of interest that banks are paying. Eighty-seven percent expected either a zero or negative real rate of interest on their money. A few conjectures are added as to why this might be so.